The decision was in response to a pivotal question from the federal appeals court that is considering the ban's constitutionality.
California voters approved Prop 8 outlawing gay marriage in 2008. But last year, a Judge Vaughn Walker declared the ban unconstitutional, ruling it violated the civil rights of same-sex couples. An appeal of that decision is pending.
Both former Gov. Arnold Schwarzenegger and then-Attorney General Jerry Brown refused to appeal the decision.
The federal appeals court then asked the California Supreme Court to clarify if backers of the measure could defend it in court.
While the state court did not address the specific case, the court said the lawmaking power granted to citizens under the state constitution doesn't end once propositions have been approved or rejected by voters.
The three-judge panel of the 9th U.S. Circuit Court of Appeals will now decide whether to accept the court's decision, and if so, how to apply it to the ongoing legal battle involving Prop 8.
Attorney General Kamala D. Harris argued against the ruling.
"I firmly believe that Proposition 8 violates the equal protection and due process clauses of the U.S. Constitution and am confident that justice will prevail," Harris said in a statement after the ruling.
The first same-sex couple to get married in California said they look forward to the day the case goes to the U.S. Supreme Court.
"I would rather take it to the Supreme Court to stop the horrible initiatives that are going all around the country, than to sit there and say yes, it's OK for a majority to take rights away from a minority," said Robin Tyler.
The Associated Press contributed to this report.